Georgia - Hong Kong FTA (2018) - Electronic Database of Investment Treaties (EDIT)

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Georgia - Hong Kong FTA (2018)

Title

GEORGIA - HONG KONG, CHINA FREE TRADE AGREEMENT

Preamble

PREAMBLE

The Government of Georgia ("Georgia") and the Government of the Hong Kong Special Administrative Region of the People's Republic of China ("Hong Kong, China"), hereinafter referred to collectively as "the Parties":

INSPIRED by their growing bilateral economic and trade relationship;

BUILDING on their rights, obligations and undertakings under the Marrakesh Agreement Establishing the World Trade Organization and the other agreements negotiated thereunder to which both Parties are party;

UPHOLDING the rights of their governments to regulate in order to meet government policy objectives;

DESIRING to strengthen their economic partnership and further liberalise bilateral trade and promote investment to bring economic and social benefits, to create new opportunities for employment and to improve the living standards of their peoples along with the protection of health and safety and of the environment;

REAFFIRMING their commitments to pursue the objective of sustainable development;

RESOLVED to create an expanded market for goods and services through establishing clear rules governing their trade, which will ensure a predictable, transparent and consistent commercial framework for business operations;

DESIRING to create favourable conditions for the development and diversification of trade between them and for the promotion of commercial and economic cooperation in areas of common interest;

RECOGNISING that the strengthening of their economic partnership through a free trade agreement, which removes barriers to trade in goods and services, will produce mutual benefits for Hong Kong, China and Georgia;

CONVINCED that this Agreement will enhance the competitiveness of their firms in global markets and create conditions encouraging economic and trade relations between them;

REAFFIRMING their commitments to democracy, the rule of law, human rights and fundamental political and economic freedoms in accordance with their obligations under international law, and principles and objectives set out in the United Nations Charter and the Universal Declaration of Human Rights; and

AFFIRMING their commitments to prevent and combat corruption in international trade and investment and to promote the principles of transparency and good governance;

Have agreed as follows:

Body

Chapter 1. INITIAL PROVISIONS, DEFINITIONS AND INTERPRETATIONS

Article 1. Establishment of a Free Trade Area

The Parties, consistent with Article XXIV of GATT 1994 and Article V of GATS, hereby establish a free trade area.

Article 2. Relation to other Agreements

The Parties confirm their rights and obligations under the WTO Agreement and the other agreements negotiated thereunder to which both Parties are party, and any other international agreement to which both Parties are party

Article 3. Geographical Application

1. This Agreement shall apply to the respective Areas of the Parties.

2. Each Party is fully responsible for the observance of all provisions of this Agreement and shall take such reasonable measures as may be available to it to ensure their observance by local governments or local authorities, where applicable, in its Area.

Article 4. General Definitions

For the purposes of this Agreement, unless otherwise specified:

(a) Agreement means the Georgia - Hong Kong, China Free Trade Agreement;

(b) Anti-dumping Agreement means the Agreement on Implemeniation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(i) Georgia means the territory of Georgia as defined by Georgian legislation, including land territory, its subsoil and the air space above it, internal waters and territorial sea, the sea bed, its subsoil and the air space above them, in respect of which Georgia exercises sovereignty, as well as the contiguous zone, the exclusive economic zone and continental shelf adjacent to its territorial sea, in respect of which Georgia exercises its sovereign rights and/or jurisdiction in accordance with international law; and

(ii) Hong Kong, China means the Hong Kong Special Administrative Region as delineated by the Order of the State Council of the People's Republic of China No. 221 dated 1 July 1997, which includes Hong Kong Island, Kowloon and the New Territories;

(d) Customs Valuation Agreement means the Agreement on the Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(e) days means calendar days;

(f) existing means in effect on the date of entry into force of this Agreement;

(g) FTA Joint Commission means the Hong Kong, China - Georgia Joint Commission established under Article 1 (Establishment of the FTA Joint Commission) of Chapter 15 (Institutional Provisions);

(h) GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement;

(i) GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement;

(j) Harmonized System (HS) means the /nternational Convention on the Harmonized Commodity Description and Coding System, including its General Rules for the Interpretation of the Harmonized System, Section Notes and Chapter Notes, as adopted and administered by the World Customs Organization;

(k) measure includes any law, regulation, procedure, requirement or practice;

(l) natural person of a Party means:

(i) for Hong Kong, China, a permanent resident of the Hong Kong Special Administrative Region of the People's Republic of China under its internal law; and

(ii) for Georgia, a natural person who under Georgian law is a national of Georgia;

(m) originating means qualifying under the rules of origin set out in Chapter 3 (Rules of Origin) to this Agreement;

(n) SCM Agreement means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement;

(o) SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;

(p) WTO means the World Trade Organization; and

(q) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh on 15 April 1994.

Article 5. Interpretations

In this Agreement, unless the context otherwise requires:

(a) in the case of Hong Kong, China, where an expression is qualified by the term "national", such expression shall be interpreted as pertaining to Hong Kong, China;

(b) in the case of Hong Kong, China, the term "international agreement" shall include an agreement or arrangement entered into by Hong Kong, China with other parts of the People's Republic of China;

(c) in the case of Hong Kong, China, any reference to an international agreement to which a Party is a party shall include an international agreement made applicable to Hong Kong, China, and any reference to the rights, obligations or undertakings of a Party under an international agreement shall include the rights, obligations or undertakings made applicable to Hong Kong, China under such an international agreement; and

(d) where anything under this Agreement is to be done within a number of days after, before, from or of a specified date or event, the specified date or the date on which the specified event occurs shall not be included in calculating that number of days.

Chapter 2. TRADE IN GOODS

Article 1. Definition

For the purposes of this Chapter, customs duty means any import duty or charge of any kind, including any form of surtax or surcharge, imposed in connection with the importation of a good, but does not include any:

(a) charge equivalent to an internal tax imposed consistently with the provisions of paragraph 2 of Article Ill of GATT 1994, in respect of the like domestic product or in respect of an article from which the imported product has been manufactured or produced in whole or in part;

(b) anti-dumping or countervailing duty applied consistently with the provisions of Article VI of GATT 1994, the Anti-dumping Agreement, and the SCM Agreement; or

fees or other charges that are covered by subparagraph 1{(a) of Article VIII of GATT 1994.

Article 2. Scope

This Chapter applies to trade in goods between the Parties.

Article 3. National Treatment on Internal Taxation and Regulation

Each Party shall accord national treatment to the goods of the other Party in accordance with Article Ill of GATT 1994. To this end, Article Ill of GATT 1994 is incorporated into and made part of this Agreement, mutatis mutandis.

Article 4. Elimination of Customs Duties

1. Each Party shall eliminate all its customs duties on goods originating in the other Party as from the date of entry into force of this Agreement except as provided in paragraph 2.

2. The products listed in Annex 2-1 (Georgia's Exclusion List) shall be subject to the most-favoured-nation customs duty rate when imported into Georgia.

3. Neither Party shall increase any existing customs duty or introduce a new customs duty on an originating good of the other Party other than in accordance with this Agreement.

Article 5. Classification of Goods

The classification of goods in trade between the Parties shall be that set out in each Partyâs respective nomenclature in conformity with the Harmonized System.

Article 6. Non-Tariff Measures

1. Unless otherwise provided in this Agreement, neither Party shall adopt or maintain any non-tariff measures, including prohibition or restriction or measure having equivalent effect, on the importation of any goods originating in the Area of the other Party, or on the exportation or sale for export of any goods destined for the Area of the other Party, except in accordance with its rights and obligations under the WTO Agreement.

2. Each Party shall ensure its non-tariff measures permitted in paragraph 1 are not prepared, adopted or applied with a view to, or with the effect of, creating unnecessary obstacles to trade between the Parties.

Article 7. Import Licensing

Each Party shall ensure that import licensing regimes applied to goods originating in the other Party are applied in accordance with the WTO Agreement, and in particular, with the provisions of the Agreement on Import Licensing Procedures, contained in Annex 1A to the WTO Agreement.

Article 8. Fees and Formalities Connected with Importation and Exportation

Each Party shall ensure, in accordance with paragraph 1 of Article VIll of GATT 1994, that all fees, charges, formalities and requirements imposed in connection with the importation and exportation of goods shall be consistent with the obligations under GATT 1994.

Article 9. Administration of Trade Regulations

1. In accordance with Article X of GATT 1994, each Party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, judicial decisions and administrative rulings pertaining to the classification or the valuation of products for customs purposes, or to rates of duty, taxes or other charges, or to requirements, restrictions or prohibitions on imports or exports or on the transfer of payments therefor, or affecting their sale, distribution, transportation, insurance, warehousing inspection, exhibition, processing, mixing or other use.

2. In accordance with Article VIIl of GATT 1994, neither Party shall impose substantial penalties for minor breaches of customs regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in customs documentation, which is easily rectifiable and obviously made without fraudulent intent or gross negligence, shall be greater than necessary to serve merely as a warning.

Chapter 3. RULES OF ORIGIN

Section 1. Rules of Origin

Article 1. Definitions

For the purposes of this Chapter:

(a) chapter, heading and subheading mean respectively a chapter (two-digit codes), a heading (four-digit codes), and a subheading (six-digit codes) of the Harmonized System;

(b) customs value means the value as determined in accordance with Customs Valuation Agreement;

(c) ex-works price means the price paid for the good ex- works to the producer located in a Party in whose undertaking the last working or processing is carried out, provided that the price includes the value of all the materials used, wage and any other cost, and profit minus any internal taxes returned or repaid when the good obtained is exported;

(d) fungible materials means materials which are interchangeable for commercial purposes, whose properties are essentially identical, and between which it is impractical to differentiate by a mere visual examination;

(e) generally accepted accounting principles means the recognised accounting standards of a Party with respect to the recording of revenues, expenses, costs, assets and liabilities, the disclosure of information and the preparation of financial statements, and those standards may encompass broad guidelines of general applications as well as detailed standards, practices and procedures;

(f) good means product or material;

(g) material means an ingredient, part, component, subassembly or good that was physically incorporated into another product or was subject to a process in the production of another product;

(h) Originating material means a material which qualifies as originating in accordance with the provisions of this Chapter;

(i) product means a product being produced, even if it is intended for later use in another production operation; and

(j) production means any methods of obtaining goods including growing, raising, mining, harvesting, fishing, aquaculture, farming, trapping, hunting, capturing, gathering, collecting, breeding, extracting, manufacturing, processing or assembling a good.

Article 2. Originating Goods

Unless otherwise provided in this Chapter, the following goods shall be considered as originating in a Party:

(a) goods wholly obtained or produced in a Party as defined in Article 3 (Goods Wholly Obtained);

(b) goods produced in a Party exclusively from originating materials; and

(c) goods produced from non-originating materials in a Party, provided that the goods conform to a regional value content of no less than 40%, except for the goods listed in Annex 3-1 (Product Specific Rules of Origin) which must comply with the requirements specified therein.

Article 3. Goods Wholly Obtained

For the purpose of subparagraph (a) of Article 2 (Originating Goods), the following goods shall be considered as wholly obtained or produced in a Party:

(a) live animals born and raised in a Party;

(b) goods obtained from live animals referred to in subparagraph (a);

(d) goods obtained from hunting, trapping, fishing, aquaculture, gathering or capturing conducted in a Party;

(e) minerals and other naturally occurring substances not included in subparagraphs (a) through (d), extracted or taken from its soil, waters, seabed or subsoil beneath the seabed;

(f) goods extracted from the waters, seabed or subsoil beneath the seabed outside the waters of Hong Kong, China, outside the territorial waters of Georgia, and outside the territorial waters of any non-Party, provided that the Party has rights to exploit such waters, seabed or subsoil beneath the seabed in accordance with relevant international agreements to which that Party is a party;

(g) goods of sea fishing and other marine products taken from the sea outside the waters of Hong Kong, China and outside the territorial waters of Georgia by a vessel registered in a Party and flying the flag of that Party or by a vessel licensed in a Party;

(h) goods processed or made on board factory ships registered in a Party and flying the flag of that Party or by a vessel licensed in a Party, exclusively from goods referred to in subparagraph (g);

(i) scrap and waste derived from processing operations in a Party, fit only for the recovery of raw materials;

(j) used goods collected there which fit only for the recovery of raw materials; and

(k) goods produced entirely in a Party exclusively from goods referred to in subparagraphs (a) to (j).

Article 4. Regional Value Content

1. The Regional Value Content (RVC) criterion shall be calculated as follows:

RVC = ex-works price - VNM / ex-works price x 100%

where:

RVC is the regional value content, expressed as a percentage;

VNM is the value of the non-originating materials.

2. VNM shall be determined on the basis of the customs value at the time of importation of the non-originating materials, including materials of undetermined origin. If such value is unknown and cannot be ascertained, the first ascertainable price paid or payable for the materials in a Party shall be applied.

3. If a good which has acquired originating status in accordance with paragraph 1 in a Party is further processed in that Party and used as material in the production of another good, no account shall be taken of the non-originating components of that material in the determination of the originating status of the latter good.

Article 5. Accumulation

The originating material of a Party, used in the production of a good in the other Party, shall be considered to be originating in the latter Party.

Article 6. Minimal Operations or Processes

1. Notwithstanding subparagraph (c) of Article 2 (Originating Goods), a good shall not be considered as originating, if it has only undergone one or more of the following operations or processes:

(a) preservation operations to ensure the good remains in good condition during transport and storage;

(b) simple assembly of parts of articles to constitute a complete article, or disassembly of goods into parts;

(d) slaughtering of animals;

(e) washing, cleaning, removal of dust, oxide, oil, paint, or other coverings;

(f) ironing or pressing of textiles;

(g) simple painting and polishing operations;

(h) husking, partial or total bleaching, polishing, and glazing of cereals and rice;

(i) operations to colour sugar or form sugar lumps;

(j) peeling, stoning and shelling, of fruits, nuts and vegetables;

(k) sharpening, simple grinding, or simple cutting;

(l) sifting, screening, sorting, classifying, grading, matching (including the making-up of sets of articles), cutting, slitting, bending, coiling, or uncoiling;

(m) simple placing in bottles, cans, flasks, bags, cases, boxes, fixing on cards or boards, and other similar packaging operations;

(n) affixing or printing marks, labels, logos or other like distinguishing signs on goods or their packaging;

(o) simple mixing of goods, whether or not of different kinds;

(p) mere dilution with water or another substance that does not materially alter the characteristics of the goods; or

(q) operations whose sole purpose is to ease port handling.

2. All operations in the production of a good carried out in a Party shall be taken into account when determining whether the working or process undergone by that good is considered as minimal operations or processes referred to in paragraph 1.

Article 7. De Minimis

A good that does not meet the change in tariff classification required in Annex 3-1 (Product Specific Rules of Origin) is nonetheless originating, if the value of non-originating materials that have been used in the production of the good and do not undergo the applicable change in_ tariff classification does not exceed 10% of the ex-works price of the given good. The value of the said non-originating materials shall be determined pursuant to paragraph 2 of Article 4 (Regional Value Content).

Article 8 . Fungible Materials

Where originating and non-originating fungible materials are used in the production of a good, the following methods shall be adopted in determining whether the materials used are originating:

(a) physical separation of the materials; or

(b) an inventory management method recognised in the generally accepted accounting principles of the exporting Party, and should be used for at least one fiscal year.